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28 Guidelines for Ferry Transportation Services New York Harbor Ferries Quickfacts Operator Service # of # of Annual Annual Fleet Category Routes Vessels Passengers Vehicles Age (years) New York Transit 16 34 9,855,000 n/aa 825 Waterway Ferry Urban New York Transit 1? 11 438,000 n/a 39 Water Taxi Ferry Urban Statue Transit 1 1 146,000 n/a 17 Cruises Ferry Urban Seastreak Transit 2 4 1,095,000 n/a 69 Ferry Urban Staten Island Transit 1 10 23,725,000 n/a 545 Ferries Ferry Urban a Not applicable History Birth, Growth, and Decline The history of scheduled ferry service in New York Harbor extends back more than 200 years. Rowboats connected Manhattan with Brooklyn before the Revolution. Service to Staten Island began in the 1820s. New York City records indicate that by 1860 eight ferries were authorized to operate across the Hudson River to New Jersey. After the Civil War, as both commerce and rail- way traffic increased, ferry traffic also continued to grow. The railroads built large ferry termi- nals in New Jersey to serve New York City--Erie Terminal, Central Terminal of New Jersey, Pennsylvania Terminal in Jersey City, the Lackawanna Terminal in Hoboken, and the West Shore Railroad Terminal in Weehawken. The first fixed link across the Hudson River was developed by the Manhattan & Hudson (now Port Authority Trans-Hudson [PATH]) urban trains and linked Jersey City, Hoboken, and Man- hattan. The Hudson Tubes opened in 1908 and immediately diverted passengers from the ferry services, although the Pennsylvania Railroad continued to operate its ferries from Jersey City. The Hudson Tubes carried almost 50 million passengers annually just a few years after opening and now carry about 85 million passengers. In 1910, the Pennsylvania Railroad opened Pennsylvania Station on 34th Street, a terminus for rail connections to New Jersey, through an extensive network of commuter trains and two under- water tunnels. These tunnels now carry about 45 million passengers annually under the Hudson. In 1927, the states of New Jersey and New York opened the Holland Tunnel, the first vehic- ular access into Manhattan from New Jersey. About 34 million vehicles annually now use the Holland Tunnel. In 1931, the George Washington Bridge opened between New Jersey and Manhattan and soon carried more than 5 million vehicles annually. In the late 1930s, the Port Authority opened the first bores of the Lincoln Tunnel into the midtown area of New York City. In 1950, the Port Authority Bus Terminal (PABT) opened near Times Square. The Lincoln Tunnel now carries more than 42 million vehicles annually, and the PABT handles about 200,000 passengers daily. The George Washington Bridge serves more than 106 million vehicles each year. Ferries also crossed the East River and connected Manhattan to Brooklyn and Queens. These ferries were among the first to cease operations when the city built the Brooklyn and the Williamsburg Bridges. In 1920, the Long Island Railroad was extended into Pennsylvania Sta- tion connecting Manhattan to Brooklyn and Queens directly with fast electric trains.

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Ferry Case Studies 29 As a result of these new fixed links, ferry service dwindled. Passengers either took direct trains into Manhattan or drove their automobiles into the city. The last scheduled ferries operated from Hoboken to Manhattan in 1967 (Wikipedia, accessed March 4, 2010). Only the New York City- operated Staten Island Ferry continued to operate. Revival, Growth, and Stabilization By the early 1980s, the cross-Hudson fixed links were straining to keep up with demand. At the same time, industrial brownfield sites on the New Jersey side of the Hudson River became available as industry moved to new locations and factories became obsolete. The sites were large, which allowed for master planning and dense, efficient development. Additionally, these sites had views of Manhattan and direct access to the Hudson River. What they did not have was easy access from the mainland. Arthur Imperatore, the President of NY Waterway, credits Regional Plan Association staff with inspiring the New Jersey Waterfront reuse vision, which combined residential and com- mercial development with access improvements. The two major access improvements were direct ferry connections to Manhattan from multiple New Jersey terminals and a light rail sys- tem operating along the waterfront from Bayonne to Weehawken, which created a development spine and linked ferry terminals, PATH stations, and the NJ Transit's Hoboken Terminal (Inter- view with Arthur Imperatore, New York Waterway, January 10, 2010). This vision has resulted in more than 6,000 housing units being developed on the west side of the Hudson between 1990 and 2000, with additional units developed over the last 10 years, along with millions of square feet of commercial space (U.S. Census Bureau). Mr. Imperatore's related firms initiated service from Weehawken, where he had purchased 350 acres of old railroad yards in the mid-1980s. Ferries operated from Port Imperial to West 38th Street in New York City. Within a year, approximately 1,500 daily passengers were rid- ing the Weehawken ferry (Regional Plan Association, 2006). Concurrently, the Port Author- ity was experiencing significant capacity issues in its tunnels, at the PABT, and on PATH. The Port Authority considered extending PATH station platforms to allow longer trains, but this alternative was too costly. Instead, the agency decided to try ferries. In the mid-1980s, the Port Authority issued a Request for Proposals from parties interested in providing ferry service from the NJ Transit's Hoboken Terminal to lower Manhattan (Interview with Port Authority, January 10, 2010). A 2006 Regional Port Authority white paper summed up the contemporary role of ferries in New York harbor: Over the last 100 years or more [ferries have] gone from essential to non-existent (with the excep- tion of the Staten Island Ferry) and then in the last twenty years to a role that might best be described as "niched." These niches include ferry services that are either part of intermodal connections or in other ways complement existing transit modes, services that provide better options than the existing ground modes, and services that can open up new development opportunities. When searching for additional ferry service opportunities, it is these characteristics to be kept in mind. (Regional Plan Asso- ciation, 2006) New York Harbor now has 21 ferry routes serving Manhattan operated by six different ferry operators (five private operators and one public agency). Most routes are 3 to 5 miles long and take 10 to 15 minutes. More than 30,000 daily passengers use private ferry services from 13 New Jersey ferry terminals to four Manhattan landings. These trips make up about 4 percent of daily travel into Manhattan from New Jersey (New York Metropolitan Transportation Council, 2008). Additional service is provided from Brooklyn and Queens to Manhattan. The iconic Staten Island Ferry carries about 65,000 passengers daily into Manhattan at Whitehall.

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30 Guidelines for Ferry Transportation Services Organizational Structure New York Harbor ferries are primarily private-sector businesses and are similar to the Amer- ican aviation system--government provides the infrastructure while the private sector is respon- sible for the planning, design, financing, and operation of ferry services. This unique metropolitan arrangement was greatly influenced by two government actions: The Mayor's Waterborne Transportation Policy, adopted in 1986, which established the pub- lic and private sector roles: The City and other public agencies will encourage ferry services. No operating subsidies will be provided to ferry operators (including subsidies for vessels). The City would consider making City land available for landing sites and would set up a reasonable regulatory framework (i.e., landing permits). The City would not object to premium fares (Interview with Alan Olmstead, New York City Department of Transportation, January 10, 2010). The Port Authority's Request for Proposals for privately operated ferry services (service initi- ated in 1989) between Hoboken and Battery Park City, with the private sector assuming the operating risk and the Port Authority providing the fixed facilities. In effect, the arrangement was a free market system with the freedom to enter the market and the freedom to fail. As a result, there was significant experimentation with new service to Pier 11 near Wall Street, East 34th Street, West 38th Street (later replaced by Pier 79), and to Battery Park City. Fees charged to ferry operators funded operating and maintenance expenses for the fixed facilities, and the City and Port Authority continued to build terminal capacity as private oper- ators incrementally expanded service. During this period, the public sector invested more than $350 million in trans-Hudson ferry facilities (Interview with Alan Olmsted, New York City Department of Transportation, January 10, 2010). New York Waterway was selected by the Port Authority to provide the HobokenBattery Park City Ferry Service and, by June 2001, was serving more than 10,000 passengers daily. The route now serves about 4,000 passengers daily, with another 2,000 passengers using the Hoboken Ferry Terminal to access other Manhattan destinations. Ridership incrementally expanded and, by 2001, about 35,000 passengers were using privately operated ferries in addition to the 65,000 passengers using the Staten Island Ferry. After the attacks of September 11, 2001, with the PATH World Trade Center Station destroyed, private ferry ridership surged to more than 65,000 daily. In 2003, PATH resumed service to lower Manhattan and ferry ridership dropped back to the levels preceding the attacks of September 11, 2001. Fuel costs put financial pressure on ferry providers because fuel costs are a much larger part of overall costs for ferry operators than fuel costs are for operators of other modes. Ferry operators increased fares as a result, and ridership dropped again to about 30,000. Some industry observers note that the New York policy model, as detailed in the Mayor's Waterborne Transportation Policy, is being challenged as operators experience financial stress caused by competition from subsidized operators, increases in costs, and decreases in ridership resulting from higher fares and the recession. There have been calls for ferries to be subsidized, just as other modes of transportation are subsidized. Operational Structure System/Service Routes In New York Harbor, aside from the publicly operated Staten Island Ferry, five private operators provide service to 4 Manhattan terminals, 13 New Jersey locations, and 6 Queens/Brooklyn sites.

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Ferry Case Studies 31 New York Waterway. The largest operator is New York Waterway, which operates 16 ferry routes, including eight operated for BillyBey Ferries. Until 2005, all of these routes were under the direct control of New York Waterway, but following financial challenges, the company spun off the routes south of NJ Transit's Hoboken Terminal (including that route and the Port Authority contract) to BillyBey for the assumption of $19 million in debt. BillyBey then con- tracted with New York Waterway to provide the service on their behalf. New York Waterway routes carry about 17,000 passengers (not including the Belford route in Monmouth County), while the BillyBey routes carry about 10,000 daily passengers. Most of the access to the New Jersey ferry terminals is by walking or other transit. While a few ter- minals have large parking lots, ferries were often developed to encourage dense, urban development. (See a photo of New York Waterway's Weehawken Terminal in Figure 5-4). New York Waterway operates free shuttle buses connecting Pier 78 to Manhattan--serving 57th Street, 49th Street, 42nd Street, and 34th Street, as well as a special Downtown loop. Five peak period routes operate, and, in the midday and at night, a separate set of five routes oper- ates in longer loop routes (one route also connects to the World Financial Center Terminal). On the New Jersey side, a combination of shuttle buses and free transfer arrangements on one NJ Transit route provide local access. New York Water Taxi. The next largest private ferry operator is New York Water Taxi. Until 2011, the company operated service from Manhattan to Brooklyn and Queens, locations that tend to be distant from subway lines (these services are now operated under public agency contract by New York Waterway). New York Water Taxi currently operates a contract service for the IKEA store in Red Hook (Brooklyn), which provides access to the store from Manhattan (see photos of this service in Figure 5-5). Weekend service was initially required as a condition of IKEA's City approvals. However, eventually IKEA chose to extend and expand the service under a contract with New York Water Taxi; the service now operates daily. On some days, IKEA ridership has reached 5,000 passengers. Seastreak. Ferry service to Monmouth County, New Jersey, is a distinct niche, catering to residents in a high-income residential area that will pay premium fares for shorter travel times as compared to highway or train. Seastreak uses four high-speed vessels to provide this service Figure 5-4. New York Waterway Weehawken Terminal.

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32 Guidelines for Ferry Transportation Services Figure 5-5. New York Water Taxi to Ikea in Brooklyn. from Atlantic Highlands and Highlands, New Jersey, while New York Waterway serves Belford, New Jersey, with one high-speed vessel. Both operators terminate in Manhattan at Pier 11. Even though the monthly passenger fare approaches $600, the services are well sub- scribed. Seastreak carries about 3,000 daily, while New York Waterway carries about 1,600. The niche for ferries in this market is speed--the journey is less than half the distance by water than by highway or train, and the travel time is about 50 minutes compared to at least a 75-minute automobile trip and a 90-minute train trip. In contrast to the other New Jersey ferry terminals, the Monmouth County terminals have large park-and-ride lots to serve a dispersed ridership. Seastreak notes the importance of park-and-ride lots in attracting and maintaining market share (Halcrow Interview with Jim Barker of Seastreak, on behalf of Port Authority, December 8, 2009).

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Ferry Case Studies 33 Staten Island Ferry. Finally, the Staten Island Ferry continues to provide service between Manhattan and Staten Island and carries about 65,000 passengers daily, making it the busiest ferry operation in North America. Service is provided by large, 1,200- to 6,000-passenger ferries oper- ating every 15 minutes in the peak period and every 30 minutes at other times. The 5-mile route takes about 25 minutes, and there is no fare. In 1997, the Staten Island Ferry became a free ser- vice, in conjunction with the Metropolitan Transportation Authority's switch to free transfers on other New York City transit services (including subway to bus and commuter rail to subway). In addition, Statue Cruises operates one commuter service between Liberty Landing Marina in New Jersey and Battery Park City in New York City. About 400 people daily use the service. Tables 5-6 and 5-7 show the various routes, services, and crossing times/locations, by operator in New York Harbor. See Figures 5-6 and 5-7 for route maps. Facility and Vessel Maintenance Ferry operators employ a variety of vessels, which has resulted in the development of ferry ter- minals that can serve vessels that board from the side or the bow. Nonetheless, bow loading is the predominant docking arrangement in New York Harbor because it allows the vessel opera- tor to avoid excessive maneuvering into a dock; instead, the vessel bumps against the dock and a gangway is lowered onto the deck. Approach and boarding are faster because the gangway allows several streams of passengers to board at once. Furthermore, because the dock and vessel have the same freeboard, a separate ramp is not required, and capital costs are reduced. This design also facilitates emergency responses. Marine Log noted that on September 11, 2001, "Because of their bow-loading design, NY Waterway's [New York Waterway's]ferries were pressed into service as waterborne ambu- lances. . . . With all of Manhattan's arteries shut down and its subways at a standstill, NY Water- way put 22 of its 24 ferries in `load and go' service at piers in lower and Midtown Manhattan, taking a total of 158,506 evacuees to points in Jersey City, Hoboken and Weehawken, N.J., as well as Brooklyn and Queens" (Snyder, 2001). Safety is a high priority, and ferry operators report that their conflicts are primarily with kayaks, jet skis, and swimmers. In addition, the waterways can sometimes be closed for digni- taries, thereby creating schedule concerns. New York Waterway. New York Waterway operates 34 vessels, mostly small 149-passenger catamarans with three crew members, operating at 15 knots. The company directly operates large terminals at Port Imperial and Hoboken in New Jersey and Pier 79 and the World Financial Cen- ter in New York City. New York Water Taxi. New York Water Taxi operates 10 vessels, including five 149-passenger, 26-knot vessels and five 75-passenger, 21-knot vessels. Seastreak. Seastreak uses four high-speed vessels to provide service from Atlantic Highlands and Highlands, New Jersey, while New York Waterway serves Belford, New Jersey, with one high-speed vessel. Staten Island Ferry. Service for the Staten Island route is provided by large, 1,200- to 6,000- passenger ferries. Staffing Levels Each ferry operator has a unique culture and different approaches for hiring and retaining ves- sel crews. Most of the private operators hire locally, at entry level, and then gradually promote employees into higher levels of responsibility. Some operators hire personnel with fishing boat

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34 Guidelines for Ferry Transportation Services Table 5-6. New York Waterway ferry services. Route Service Service Crossing Crossing Season Schedule Time Location Manhattan Year-round Once per day 60 to 67 min Raritan Midtown/W. 39th Departures Bay/Lower Belford/Harbor Way New York Bay Manhattan Midtown/ Year-round Every 30 min 15 to 20 min Hudson River W. 39thEdgewater Departures Ferry Landing Manhattan Year-round Every 20 min 10 min Hudson River Midtown/W. 39th Departures Hoboken 14th Street Manhattan Midtown/ Year-round Every 15 min 7 to 8 min Hudson River W. 39thLincoln Departures Harbor/Weehawken Manhattan Midtown/ Year-round Every 30 min 10 to 15 min Hudson River W. 39thNewport Departures Manhattan Midtown/ Year-round Every 30 min 15 min Hudson River W. 39thPaulus Hook Departures Manhattan Midtown/ Year-round Every 20 min 8 min Hudson River W. 39thPort Imperial/ Departures Weehawken Manhattan Pier 11/ Year-round Every 15 min 40 to 55 min Raritan Wall StreetBelford/ Departures Bay/Lower Harbor Way New York Bay Manhattan Pier 11/ Year-round Every 10 to 20 min 12 min Hudson River Wall StreetHoboken/ Departures NJ Transit Terminal Manhattan Pier 11/ Year-round Every 15 min 15 min Hudson River Wall StreetLiberty Departures Harbor/Marin Blvd Manhattan Pier 11/ Year-round Every 15 min 8 min Hudson River Wall StreetPaulus Hook Departures Manhattan Pier 11/ Year-round Every 10 to 20 min, 18 to 22 min Hudson River Wall StreetPort Departures no service between Imperial/Weehawken 10 a.m. and 4 p.m. Manhattan Pier 11/ Year-round Every 40 min 20 min Hudson River Wall StreetPort Liberte Departures Manhattan World Year-round Every 30 min 40 to 55 min Raritan Financial Center Departures Bay/Lower Belford/Harbor Way New York Bay Manhattan World Year-round Every 30 min 8 min Hudson River Financial Center Departures Hoboken/14th Street Manhattan World Year-round 10 to 30 min 8 min Hudson River Financial Center Departures Hoboken/NJ Transit Terminal Manhattan World Year-round Every 24 min 12 min Hudson River Financial CenterLiberty Departures Harbor/Marin Blvd Manhattan World Year-round 7 to 8 min 8 min Hudson River Financial Center Departures Paulus Hook Manhattan World Year-round 20 to 40 min 14 to 15 min Hudson River Financial CenterPort Departures Imperial/Weehawken Paulus Hook Year-round 20 to 75 min, 55 to 60 min Raritan Belford/Harbor Way Departures 5:45 a.m. to 9:30 a.m., Bay/Lower 30 to 120 min New York Bay 2:40 p.m. to 8:55 p.m. HaverstrawOssining Year-round 30 min until 8:42 a.m., 15 min Hudson River Departures one departure at 4:12 p.m. Every 30 to 40 min in the p.m. from Haverstraw NewburghBeacon Year-round 30 to 40 min in a.m., 9 min Hudson River Departures 10 to 15 min in p.m. East River Route Year-round 2 a.m. departures, 55 to 60 min East River Departures 3 p.m. departures

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Ferry Case Studies 35 Table 5-7. New York Water Taxi, Statue Cruises, Seastreak, and Staten Island Ferry services. New York Statue Cruises Seastreak Staten Island Water Taxi Ferry Route Ikea Express Liberty Landing Connors Staten Island MarinaWorld HighlandsEast Manhattan Financial Terminal 35th Street Service Season Year-round Year-round Year-round Year-round Departures Departures Departures Departures Service Every 20 min Every 30 min a.m. and p.m. 15 to 60 min Schedule weekdays from weekdays from peak-hour 2:40 p.m. to 7:20 6:00 a.m. to 8:45 service only from p.m. p.m. Connors Highlands, 30 to 75 min from Manhattan Crossing Time 15 min 10 min 60 min 25 min Crossing Location East River Hudson River Hudson River New York Harbor experience or even maritime academy training, but, in general, new employees begin as deckhands. Crew training and coordination with the Coast Guard is continuous for all ferry operators. New York Waterway. New York Waterway employs about 130 people as crew members and administrative staff. Figure 5-6. Hudson River and East River crossings to Manhattan.

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36 Guidelines for Ferry Transportation Services Figure 5-7. ManhattanNew Jersey Shore map. New York Water Taxi. New York Water Taxi employs 50 to 100 employees depending on the season. Staten Island Ferry. The Staten Island Ferry employs about 625 staff, two-thirds of which are vessel crew. Financial Structure Fares Fares for New York Waterway, New York Water Taxi, Seastreak, and Staten Island Ferry are shown in Tables 5-8 and 5-9. Funding Sources Other than the Staten Island Ferry and a handful of demonstration services, the New York Harbor ferries do not receive operating subsidies. Public agencies have built ferry docks along the waterfront using municipal, regional, state, and federal funds, and, in general, the guidance provided by the Mayor's 1986 Waterborne Transportation Policy continues to be followed. New York Harbor ferries now routinely carry 30,000 passengers each weekday (not including the Staten Island Ferry), with most of the use occurring on the trans-Hudson corridor. In this

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Ferry Case Studies 37 Table 5-8. Fares for New York Waterway. Route Fare Adult Child Senior Bicycle 10 Trip Monthly Student 6 to Monthly 11 years Manhattan $20.00 $9.00 $16.50 $3.00 $190.00 $605.00 $455.00 Midtown/W. 39th Belford/Harbor Way Manhattan Midtown/ $9.50 $6.00 $8.75 $1.25 $78.00 $272.00 $214.00 W. 39thEdgewater Ferry Landing Manhattan $8.50 $5.50 $7.75 $1.25 $70.25 $252.00 $210.00 Midtown/W. 39th Hoboken 14th Street Manhattan Midtown/ $8.50 $5.50 $7.75 $1.25 $70.25 $252.00 $210.00 W. 39thLincoln Harbor/Weehawken Manhattan Midtown/ $7.25 $3.75 $6.25 $1.00 $72.50 $252.00 $180.00 W. 39thNewport Manhattan $7.25 $3.75 $6.25 $1.00 $72.50 $252.00 $180.00 Midtown/W. 39th Paulus Hook Manhattan Midtown/ $8.50 $5.50 $7.75 $1.25 $70.25 $252.00 $210.00 W. 39thPort Imperial/Weehawken Manhattan Pier 11/ $20.00 $9.00 $16.50 $3.00 $190.00 $605.00 $455.00 Wall Street Belford/Harbor Way Manhattan Pier 11/ $6.50 $3.25 $6.00 $1.00 $65.00 $214.00 $155.00 Wall Street Hoboken/NJ Transit Terminal Manhattan Pier 11/ $6.50 $3.25 $6.00 $1.00 $65.00 $214.00 $155.00 Wall StreetLiberty Harbor/Marin Blvd Manhattan Pier 11/ $6.50 $3.25 $6.00 $1.00 $65.00 $214.00 $155.00 Wall StreetPaulus Hook Manhattan Pier 11/ $12.00 $7.00 $11.00 $1.25 $100.00 $332.00 $263.00 Wall StreetPort Imperial/Weehawken Manhattan Pier 11/ $9.25 $4.75 $8.25 $1.00 $92.50 $312.00 $225.00 Wall StreetPort Liberte Manhattan World $20.00 $9.00 $16.50 $3.00 $190.00 $605.00 $455.00 Financial Center Belford/Harbor Way Manhattan World $10.00 $6.00 $9.00 $1.25 $80.00 $282.00 $220.00 Financial Center Hoboken/14th Street Manhattan World $5.50 $2.75 $5.00 $1.00 $55.00 $181.00 $130.00 Financial Center Hoboken/NJ Transit Terminal Manhattan World $5.00 $2.50 $4.50 $1.00 $50.00 $166.00 $124.50 Financial Center Liberty Harbor/Marin Blvd Manhattan World $5.50 $2.75 $5.00 $1.00 $55.00 $181.00 $130.00 Financial Center Paulus Hook Manhattan World $12.00 $7.00 $11.00 $1.25 $100.00 $332.00 $263.00 Financial Center Port Imperial/Weehawken Paulus Hook $20.00 $9.00 $16.50 $3.00 $190.00 $605.00 $455.00 Belford/Harbor Way Haverstraw $3.00 $2.75 $2.00 n/aa $27.00 $100.00 n/a Ossining NewburghBeacon $1.00 $0.50 $0.50 n/a $9.00 n/a n/a a Not applicable.

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38 Guidelines for Ferry Transportation Services Table 5-9. Fares for New York Water Taxi, Statue Cruises, Seastreak, and Staten Island Ferry. Routes Fares Adult Child Senior Bicycle 10 Trip Monthly Student (6 to 11) Monthly New York Ikea Express $5.00 n/aa n/a n/a n/a n/a n/a Water Taxi Statue Liberty Landing $7.00 $5.00 $6.00 n/a $55.00 $220.00 n/a Cruises MarinaWorld Financial Terminal Seastreak Connors $23.00 $16.00/ n/a $5.00 $192.00 $625.00 n/a HighlandEast $9.00 35th Street Staten Staten Island Free Island Ferry Manhattan a Not applicable. corridor, ferry service has encouraged the development of thousands of New Jersey residential units and has also contributed toward economic development on the west side of the Hudson. Ferries have also helped relieve overcrowding on the region's fixed links, including the Holland Tunnel, the Lincoln Tunnel, and the PATH services. There is some concern that the 1986 model is fraying. All operators report some level of financial stress related to providing commuter services. The financial challenges result from high fixed costs and highly peaked service patterns that limit the ability of operators to spread costs out over the entire day--about 75 percent of ferry ridership occurs in the 4-hour peak periods (New York Metropolitan Transportation Council, 2008). While public agencies, through their ownership of the terminals, have removed a significant capital expense from the operators, the carrying costs of vessels are still assumed by the ferry companies and are significant. A $3-million ferry would likely require $300,000 annually in financing costs, rep- resenting the fares of about 60,000 passengers annually or 230 passengers each day. In addi- tion, diesel fuel costs in the mid-Atlantic area roughly doubled between 2000 and 2009 (com- pared to inflation which increased about 25 percent over that period) (U.S. Department of Energy, accessed April 14, 2010), changing the financing assumptions that the pre-2001 ferry system was based upon. Several New York Harbor ferry operators report data to the National Transit Database. In 2009, these ferry operators reported combined operating costs totaling about $43 million, result- ing in an average hourly cost of about $575. These costs include vessel capital expenses. It is likely that if the vessel costs were considered a public capital expense and were removed from the oper- ating expenses, operating expenses would be reduced by 15 to 20 percent (National Transit Data- base, 2010a, 2010b, 2010c). Planning Issues In spite of the current financial challenges facing ferry operators, City policy continues to encourage expansion of waterborne transit services. The public benefits of such services are eco- nomic development, congestion relief, and improved emergency response. New York City pro- vides a good example of the public benefits of patient, incremental expansion of ferry service under private control. The emerging paradigm for New York Harbor Ferries is as a transit service Available for emergency response. For areas that have few or poor transit options.